Global Stock Markets-Weekly Updates ( 19-23 June 2023): The global stock market indexes closed lower during the week that ended on 23 June. The stock market indexes in US, Europe, China, and Japan ended the week with significant losses. The market sentiments wast hit due to worries about inflation, interest rate hikes by the central banks, and its impact on economic growth. The economic data released during the week were also not supportive.
The US Stock Markets – Weekly Updates
The US stock markets ended lower during the truncated week. The markets were closed on Monday to observe the Juneteenth holiday. Nasdaq and S&P 500 registered their first weekly drops in eight weeks and six weeks respectively. The growth stocks outperformed the value stocks during the week.
The investors were mainly focused on the Federal Reserves Chairman Jerome Powell’s testimony before Congress on Wednesday and Thursday. The market sentiments were dented after Powell signaled that two more rate hikes are on the card this year to control the sticky inflation. Even the majority of the Fed policy committee members expect at least two more 25 bps hikes by the year-end.
Meanwhile, on Thursday, the news of the Bank of England and Norway’s central bank accelerated their rate hike pace, seems to be adding more fuel to the weak global stock market sentiments.
The economic data released during the week were not much favorable for the markets, further, it deepen worries that tight monetary policy was pushing the US economy into recession. A survey showed that the manufacturing activity in June fell to the lowest level since December. The weekly jobless claims were steady during the week, at the highest level since October 2021.
However, the housing sector showed some surprising strength, as sales of existing homes sales data came slightly higher. Meanwhile, the long-term US Treasury yields ended without any changes and traded in a tight range during the week.
European Stock Market Indexes- Weekly Updates
European stock markets fell sharply during the week, as investors fear about interest rate hikes and recession are returned. After a surprising 50 bps hike by the Bank of England, investors now fear that this might cause a recession in Britain. The slow economic growth in China and hawkish comments by US Fed Chair Powell in his testimony also dented the market mood during the week.
The Bank of England had unexpectedly raised a 50 bps interest rate as the UK’s CPI inflation failed to slow down for the fourth consecutive month and the Core inflation accelerated to a 31-year high. The Swiss and Norway’s central bank also hiked the interest during the week.
The eurozone economic data released during the week showed some weakness. A survey showed that the eurozone business output data was steady in June not much development. While a flash eurozone composite PMI output index fell to a five-month low.
German producer prices rose at the slowest pace since July 2021. Meanwhile, Ifo Institute forecasted that the German economy would contract by 0.4% in 2023, more than the 0.1% it predicted earlier in March.
Asian Stock Markets Updates.
Asian stock market indexes ended lower during the week, as investors fear interest rate hikes and recession are back. The lower-than-expected Chinese stimulus package and weak economic data also dented investors’ mood during the week. The Indian stock market indexes followed the global stock market cues and also closed lower during the week. You can read about the Indian stock market weekly updates here.
Japan Stock Market
Japan’s Nikkei ended the week lower mainly due to profit booking after a solid rally in the past few weeks. Japan’s core inflation came slightly higher than expected and that hit the market sentiments in the last trading session.
The hot inflation data fueled speculation that the Bank of Japan could revise upward its inflation forecast in its next meeting. The CPI inflation came at 3.2% in May, above BoJ’s 2% inflation target. A survey showed that manufacturing activity fell in June due to muted demand.
Chinese Stock Market
Chinese stock market index Shanghai fell during the holiday-shortened week. The Chinese markets were closed on Thursday and Friday due to the Dragon boat festival holiday. Investor moods were downbeat due to a lack of stimulus measures from Beijing, despite a slowdown in economic recovery after the pandemic.
The People Bank of China cuts its 1-year and 5-year loan prime rates (LPR) by 10 bps at the beginning of the week. The market sentiment was hit as some analysts had predicted a 15 bps cut in the 5-year (LPR).
Hong Kong benchmark, the Hang Seng index closed sharply lower, its biggest drop in three months during the holiday-shorten week. The Hang Seng index was closed on Thursday due to Dragon Boat Festival holiday.
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